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Bayer: Lowering 2023 Guidance Largely Based on Increased Glyphosate Competition

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Bayer AG
(BAYN)

Bayer BAYN lowered guidance for the full-year 2023 largely based on declines in the sales of glyphosate products, but we don’t expect a major impact to the firm’s fair value estimate or moat based on the lower expectations. We had already incorporated lower projections for 2023 than management’s guidance based on the first-quarter results. Given the return of competitive glyphosate production, we had expected a major decline in herbicide crop science sales. Also, the lowered outlook for 2023 doesn’t have a major impact on our long-term outlook for the firm.

Additionally, we believe the new CEO Bill Anderson (started in the second quarter) is likely establishing a low base from which to build growth going forward. We expect Anderson to increase the risk tolerance needed to improve innovation at the firm and accelerate product development timelines, similar to the culture at his previous firm, Roche. Also, we believe the separation of the crop science business and healthcare business is increasingly likely under Anderson. We believe the two units don’t offer synergies under one company, and Anderson’s fresh strategic perspective could accelerate a potential breakup of the company.

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The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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Damien Conover

Sector Director
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Damien Conover, CFA, is the director of healthcare equity research for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He is also director of equity strategy, responsible for helping to shape, package, and surface research based on Morningstar’s investment philosophy by working closely with the firm’s sector strategists and directors.

Before joining Morningstar in 2007, Conover was an equity research analyst covering the healthcare sector for Raymond James, Bank of Montreal, and Tucker Anthony.

Conover holds bachelor’s and master’s degrees in finance from the University of Wisconsin and was a member of its Applied Security Analysis Program. He also holds the Chartered Financial Analyst® designation.

Damien Conover, CFA, is the director of healthcare equity research for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He is also director of equity strategy, responsible for helping to shape, package, and surface research based on Morningstar’s investment philosophy by working closely with the firm’s sector strategists and directors.

Before joining Morningstar in 2007, Conover was an equity research analyst covering the healthcare sector for Raymond James, Bank of Montreal, and Tucker Anthony.

Conover holds bachelor’s and master’s degrees in finance from the University of Wisconsin and was a member of its Applied Security Analysis Program. He also holds the Chartered Financial Analyst® designation.

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